Perspectives from an English Historian who just happens to be Gay, Catholic, and a Democratic Socialist. Now back in the UK after 20 years of living in the United States. The Blog is eclectic in covering all these sides of my Life. Follow on Twitter at PaulBHalsall

Wednesday, June 03, 2009

Such is the Daily Telegraph Headline. But when we read the story we get quite another reality. In fact, given the sample size for 602 professionalss, virtually none of these predictions (except possible a V shaped recovery) fall outside standard deviations.

The opinions of "professionals" quoted are almost equally scattered around the four possible options.

The truth? Professionals here cannot predict the future, and neither can anyone else.

When the investment bank asked experts what they expected the trajectory of the global economy to be this year and next, 37.5pc predicted a W-shape – temporary recovery, before renewed weakness – and 31.5pc a U-shape, representing weak growth for some time before gradual recovery. Another 26.5pc favoured the L-shape: growth remaining weak for a protracted period.

Just 4.5pc opted for a V-shape – weakness and then sharp recovery – according to the survey of 605 professionals, who worked for a broad range of foreign exchange investors including hedge funds, real money managers, proprietary trading desks and corporates.

The pessimism about the economy was reflected in experts' opinions about the recent rally in "risky assets" such as shares.

Thirty-seven per cent said they thought we were in a bear market rally close to ending, while 23.5pc said it was a bear market rally with further to go, a bearish total of over 60pc; 22pc thought it sustainable but that further gains were unlikely, and 17.5pc said risky assets had further to rally.

“The recent strong performance of risky assets is seen by investors as a ‘bear market rally’ that is close to ending,” the bank said. “This is consistent with the general view that any global economic recovery over the next year will be shallow or temporary – U or W-shaped.